In surmising the post-war history of development aid, we observe two tragedies. ​ The first is frequently eulogised by political leaders: this is the fact that interventions such as anti-malarials and bed nets cost almost nothing and are still desperately needed in parts of the third world. ​ The second is rarely mentioned: that the West has spent $2.3 trillion on overseas aid over the last five decades((p4;​ no source cited.)) and yet these basic needs remain. ​ If this second tragedy was more commonly discussed, then there might be a greater recognition that the problem lies more in the nature and modalities of aid than in a lack of resources. ​ "This book is about that second tragedy."​((p4.))

In surmising the post-war history of development aid, we observe two tragedies. ​ The first is frequently eulogised by political leaders: this is the fact that interventions such as anti-malarials and bed nets cost almost nothing and are still desperately needed in parts of the third world. ​ The second is rarely mentioned: that the West has spent $2.3 trillion on overseas aid over the last five decades((p4;​ no source cited.)) and yet these basic needs remain. ​ If this second tragedy was more commonly discussed, then there might be a greater recognition that the problem lies more in the nature and modalities of aid than in a lack of resources. ​ "This book is about that second tragedy."​((p4.))

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==== Planners and Searchers ====

==== Planners and Searchers ====

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Easterly distinguishes two approaches to overseas aid, planning and searching. ​ The essential difference is that planning is a top-down approach and searching a bottom-up. ​ Planning starts with top-level political will and an overarching goal, for instance the Millennium Development Goals. ​ It begins with an attractive political vision. ​ It is a politician'​s response to the feeling that "​something must be done"​. ​ Massive resources are mobilised, large-scale organisation is set up to allocate and disburse those resources. ​ It is the application of utopian social engineering to the field of overseas aid. It typically fosters very weak forms of feedback (information struggles to battle its way back up the enormous hierarchy from poor rural recipient through half a dozen layers of bureaucracy back to the planner himself) and little or no accountability (the planner will not still be in office by the time the results of his intervention are in, and in any case, the realisation that a ten- or twenty-year plan has failed is uselessly blunt information as far as holding planners accountable is concerned). ​ Easterly sees the theme of planning uniting a coherent history of the West's approach to the third world spanning centuries.

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Easterly distinguishes two approaches to overseas aid, planning and searching. ​ The essential difference is that planning is a top-down approach and searching a bottom-up. ​ Planning starts with top-level political will and an overarching goal, for instance the Millennium Development Goals. ​ It begins with an attractive political vision. ​ It is a politician'​s response to the feeling that "​something must be done"​. ​ Massive resources are mobilised, large-scale organisation is set up to allocate and disburse those resources. ​ It is the application of utopian social engineering to the field of overseas aid. It typically fosters very weak forms of feedback (information struggles to battle its way back up the enormous hierarchy from poor rural recipient through half a dozen layers of bureaucracy back to the planner himself) and little or no accountability (the planner will not still be in office by the time the results of his intervention are in, and in any case, the realisation that a ten- or twenty-year plan has failed is uselessly blunt information as far as holding planners accountable is concerned). ​ Easterly sees the theme of planning ​as uniting a coherent history of the West's approach to the third world, spanning centuries.

Searchers, on the other hand, operate from the ground up. Searching starts with observation of the problems and constraints facing poor people, and with experimentation with micro-level solutions whether they be organisational or technological. ​ Searching is an individual'​s response to the feeling that "​something must be done", or rather, that "I must do something"​. ​ It begins with no resources, and seeks the minimum necessary resources as and when they are needed. ​ It is the application of entrepreneurial initiative to the field of overseas aid. It integrates and supports existing or nascent solutions developed by poor people themselves. ​ It is typically highly responsive to feedback and naturally holds those responsible to account, within a useful timeframe that makes clear the different levels of success of projects competing for resources. ​ Easterly sees searching as essentially the same as the successful process not only of Western business but Western politics, in which '​political entrepreneurs'​ seek out policies that will win voters and enact them in a piecemeal fashion --- rather than designing a grand utopian plan.

Searchers, on the other hand, operate from the ground up. Searching starts with observation of the problems and constraints facing poor people, and with experimentation with micro-level solutions whether they be organisational or technological. ​ Searching is an individual'​s response to the feeling that "​something must be done", or rather, that "I must do something"​. ​ It begins with no resources, and seeks the minimum necessary resources as and when they are needed. ​ It is the application of entrepreneurial initiative to the field of overseas aid. It integrates and supports existing or nascent solutions developed by poor people themselves. ​ It is typically highly responsive to feedback and naturally holds those responsible to account, within a useful timeframe that makes clear the different levels of success of projects competing for resources. ​ Easterly sees searching as essentially the same as the successful process not only of Western business but Western politics, in which '​political entrepreneurs'​ seek out policies that will win voters and enact them in a piecemeal fashion --- rather than designing a grand utopian plan.

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It is worth noting that, generally speaking, it is only possible to get away with planning when the planner is answerable to a population that isn't being planned. ​ Thus Western voters select searchers to represent them, but elect planners to work on foreign economies, since planners can deliver broad, ambitious, superficial promises, which are much more attractive to Western voters than the piecemeal support of a hodgepodge of existing micro-schemes that essentially amount to no more than a continuation of existing processes.

It is worth noting that, generally speaking, it is only possible to get away with planning when the planner is answerable to a population that isn't being planned. ​ Thus Western voters select searchers to represent them, but elect planners to work on foreign economies, since planners can deliver broad, ambitious, superficial promises, which are much more attractive to Western voters than the piecemeal support of a hodgepodge of existing micro-schemes that essentially amount to no more than a continuation of existing processes.

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====== Part I --- Why Planners Cannot Bring Prosperity ======

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====== Part I: Why Planners Cannot Bring Prosperity ======

===== The Legend of the Big Push =====

===== The Legend of the Big Push =====

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Unfortunately,​ this legend is at best not supported and at worst contradicted by available evidence. ​ Firstly, comparisons of the growth of poor and rich countries do not reveal a level of poverty (on the country level) at which growth is low. Poor countries do have lower growth under some formulations,​ but this is because they have worse governments --- when controls for quality of governance are added the difference between rich and poor disappears. ​ Further, many countries wander up and down the ladder (countries are continually '​escaping'​ this poverty trap whilst others are returning to it). Researchers have repeatedly attempted to find a relationship between aid and growth, and although their occasional findings are widely publicised by the aid community, the successful study is usually subsequently repeated with a new dataset only to find that the positive relationship disappears.

Unfortunately,​ this legend is at best not supported and at worst contradicted by available evidence. ​ Firstly, comparisons of the growth of poor and rich countries do not reveal a level of poverty (on the country level) at which growth is low. Poor countries do have lower growth under some formulations,​ but this is because they have worse governments --- when controls for quality of governance are added the difference between rich and poor disappears. ​ Further, many countries wander up and down the ladder (countries are continually '​escaping'​ this poverty trap whilst others are returning to it). Researchers have repeatedly attempted to find a relationship between aid and growth, and although their occasional findings are widely publicised by the aid community, the successful study is usually subsequently repeated with a new dataset only to find that the positive relationship disappears.

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This chapter is both complex in its treatment of various problems in specification and testing, and incomplete in its need to say no more than two sentences about any given study. ​ But it is clear that available research has produced very little clear knowledge about the relationship between aid and growth. ​ Research which is lined up in support of a new Big Push has been hand-picked from a messy and esoteric debate --- whilst this research in itself is perfectly scientific, the cherry-picking only of studies that happen to support a particular conclusion and the disregarding of the rest is certainly not. When looked at in detail, instead of picking out a particular paragraph or two, often those few studies employed to support the Big Push agenda fail to do so for one or other technical reason.

+

This chapter is both complex in its treatment of various problems in specification and testing, and incomplete in its practice of saying ​no more than two sentences about any given study. ​ But it is clear that available research has produced very little clear knowledge about the relationship between aid and growth. ​ Research which is lined up in support of a new Big Push has been hand-picked from a messy and esoteric debate --- whilst this research in itself is perfectly scientific, the cherry-picking only of studies that happen to support a particular conclusion and the disregarding of the rest is certainly not. When looked at in detail, instead of picking out a particular paragraph or two, often those few studies employed to support the Big Push agenda fail to do so for one or other technical reason.

Development economists are on much safer ground when assessing micro interventions,​ such as a new healthcare programme. ​ By measuring specific target outcomes, using randomised selection and a control group, the assessment of individual activities is well within our power. ​ One of the problems with the Planner'​s Big Push approach is that it is extremely difficult to appraise in a scientific way: it is an act of faith that a large increase in aid will lead to growth. ​ Interventions that can easily be appraised in a scientific way ought to be favoured.

Development economists are on much safer ground when assessing micro interventions,​ such as a new healthcare programme. ​ By measuring specific target outcomes, using randomised selection and a control group, the assessment of individual activities is well within our power. ​ One of the problems with the Planner'​s Big Push approach is that it is extremely difficult to appraise in a scientific way: it is an act of faith that a large increase in aid will lead to growth. ​ Interventions that can easily be appraised in a scientific way ought to be favoured.

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Easterly briefly details the history of disastrous failure of structural reform programmes, pushed heartily by the IMF and World Bank since around 1980, in particular in the transition economies of Eastern Europe, as well as in Latin America and Africa.

Easterly briefly details the history of disastrous failure of structural reform programmes, pushed heartily by the IMF and World Bank since around 1980, in particular in the transition economies of Eastern Europe, as well as in Latin America and Africa.

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He briefly reiterates the strength of the market as a means of enabling specialisation and exchange, domestically and internationally,​ but unusually mentions through ​an example the notion of dynamic comparative advantage.((That is, that people and even countries get better and better at doing what they are currently doing, rather than having innate strengths based on geography or climate. ​ Thus, a poor country that concentrates on agriculture will diverge in wealth from a slightly richer one that concentrates on industrial activity, because cumulative learning is more intensive in industrial than in agricultural activity — greater gains in productivity are possible.)) ​ Financial markets also play an important role in allocating investment efficiently,​ rather than forcing people who have money to invest it in their own activities, whether it is an efficient use of the money or not.

+

He briefly reiterates the strength of the market as a means of enabling specialisation and exchange, domestically and internationally,​ but uses an example ​to explain ​the notion of dynamic comparative advantage.((That is, that people and even countries get better and better at doing what they are currently doing, rather than having innate strengths based on geography or climate. ​ Thus, a poor country that concentrates on agriculture will diverge in wealth from a slightly richer one that concentrates on industrial activity, because cumulative learning is more intensive in industrial than in agricultural activity — greater gains in productivity are possible.)) ​ Financial markets also play an important role in allocating investment efficiently,​ rather than forcing people who have money to invest it in their own activities, whether it is an efficient use of the money or not.

The most important explanation in the chapter runs through the bottom-up problems with markets, and gives examples of ways in which solutions evolve in ad hoc ways in different developing economies.

The most important explanation in the chapter runs through the bottom-up problems with markets, and gives examples of ways in which solutions evolve in ad hoc ways in different developing economies.

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> The principle is //​non-intervention//​. ​ Don't reward bad governments by working through them, but don't try to boss them around or overthrow them either. ​ The status quo of both donors and gangsters badly needs some work. ---p137--8

> The principle is //​non-intervention//​. ​ Don't reward bad governments by working through them, but don't try to boss them around or overthrow them either. ​ The status quo of both donors and gangsters badly needs some work. ---p137--8

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====== Part II --- Acting Out the Burden ======

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====== Part II: Acting Out the Burden ======

===== The Rich Have Markets, the Poor Have Bureaucrats =====

===== The Rich Have Markets, the Poor Have Bureaucrats =====

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> brazenly states its objective is to further "the foreign policy goals of the United States."​ ---p176

> brazenly states its objective is to further "the foreign policy goals of the United States."​ ---p176

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DfID (the UK agency) is notably more committed to independent evaluation of its aid projects than most other aid agencies. ​ At the other extreme, the UN system contains much of the most absurd conference-,​ report- and meeting-driven time-wasting,​ and various examples of their nonsense are cited.((See a spoof of UN document generation at [[http://​www.unosdg.org/​]].))

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DfID (the UK agency) is notably more committed to independent evaluation of its aid projects than most other aid agencies. ​ At the other extreme, the UN system contains much of the most absurd conference-,​ report- and meeting-driven time-wasting,​ and various ​[[http://​www.unosdg.org/​|examples of their nonsense]] are cited.((See a spoof of UN document generation at [[http://​www.unosdg.org/​|UNOSDG]].))

> To be fair, there is incomprehensible language [like that generated by various UN agencies on a continual basis] also in private-sector documents, such as investment prospectuses or engineering designs. ​ The difference is that in private-sector documents, the jargon actually has some meaning to specialists. ​ In UN documents, the jargon has no substantive content for anyone. ---p176

> To be fair, there is incomprehensible language [like that generated by various UN agencies on a continual basis] also in private-sector documents, such as investment prospectuses or engineering designs. ​ The difference is that in private-sector documents, the jargon actually has some meaning to specialists. ​ In UN documents, the jargon has no substantive content for anyone. ---p176

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> Statistically,​ spending a lot of time under an IMF programme is associated with a higher risk of state collapse... In retrospect, it would have been better if the IMF were not involved at all in these cases. ---p192

> Statistically,​ spending a lot of time under an IMF programme is associated with a higher risk of state collapse... In retrospect, it would have been better if the IMF were not involved at all in these cases. ---p192

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Another major reason that the IMF shouldn'​t get too closely involved in negotiating government policy is that it has terrible information on what is happening in country. ​ The IMF relies on statistics that are commonly highly inaccurate (there are often discrepancies of 100 per cent merely between two IMF simultaneous IMF measures of the same variable), and the models the IMF tries to employ are influenced by a large number of variables that the IMF is unable to measure at all.

+

Another major reason that the IMF shouldn'​t get too closely involved in negotiating government policy is that it has terrible information on what is happening in country. ​ The IMF relies on statistics that are commonly highly inaccurate (there are often discrepancies of 100 per cent merely between two simultaneous IMF measures of the same variable), and the models the IMF tries to employ are influenced by a large number of variables that the IMF is unable to measure at all.

> In March 2003, IMF staff put Mali's GDP growth in 2001 at 1.5 per cent. By August 2003, it had raised the 2001 number to 3.5 per cent. Just five months later, in January 2004, IMF staff now put Malian growth in 2001 at 13.3 per cent! This is not to say the IMF is incompetent at statistics; it is just that any statistics are very shaky in very poor countries. ---p196

> In March 2003, IMF staff put Mali's GDP growth in 2001 at 1.5 per cent. By August 2003, it had raised the 2001 number to 3.5 per cent. Just five months later, in January 2004, IMF staff now put Malian growth in 2001 at 13.3 per cent! This is not to say the IMF is incompetent at statistics; it is just that any statistics are very shaky in very poor countries. ---p196

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The statistics show that failure to repay IMF loans does not make it more difficult for debtor governments to obtain further loans from the IMF. Nor do 'bad government policies'​ make further loans less likely.((Easterly counts (a) inflation above 40 per cent, (b) a black-market premium on foreign exchange above 40 per cent, (c) whether official exchange rates are more than 40 per cent out of line of the '​competitive rate', and (d) interest rates controlled at less than -5 per cent in real terms as 'bad policies'​.)) ​ In more extreme cases, the World Bank is often drafted in to provide additional loans to help governments repay previous loans. ​ The IMF has a certain incentive to act in this way --- whilst it may not protect the IMF's principal in the long run, it does prevent it having to admit mistakes in the short term.

The statistics show that failure to repay IMF loans does not make it more difficult for debtor governments to obtain further loans from the IMF. Nor do 'bad government policies'​ make further loans less likely.((Easterly counts (a) inflation above 40 per cent, (b) a black-market premium on foreign exchange above 40 per cent, (c) whether official exchange rates are more than 40 per cent out of line of the '​competitive rate', and (d) interest rates controlled at less than -5 per cent in real terms as 'bad policies'​.)) ​ In more extreme cases, the World Bank is often drafted in to provide additional loans to help governments repay previous loans. ​ The IMF has a certain incentive to act in this way --- whilst it may not protect the IMF's principal in the long run, it does prevent it having to admit mistakes in the short term.

-

This repeated-lending cycle reached an unsustainable crisis during the 1990s, at which point many of the poorest developing countries had clearly reached a point at which their debts were unserviceable. ​ After 1996, IMF's response was to label certain countries '​Heavily Indebted Poor Countries'​ (or HIPCs). ​ Countries qualified largely by agreeing to much the same conditionalities as they had previously as part of structural adjustment programmes (SAPs). ​ The HIPC initiative was supposed to be a once-and-for-all solution that came with optimistic projections for buoyant growth, which again largely failed to materialise for much the same reasons that the original loans had failed --- necessitating a second round of forgiveness in 1999.

+

This repeated-lending cycle reached an unsustainable crisis during the 1990s, at which point many of the poorest developing countries had clearly reached a point at which their debts were unserviceable. ​ After 1996, the IMF's response was to label certain countries '​Heavily Indebted Poor Countries'​ (or HIPCs). ​ Countries qualified largely by agreeing to much the same conditionalities as they had previously as part of structural adjustment programmes (SAPs). ​ The HIPC initiative was supposed to be a once-and-for-all solution that came with optimistic projections for buoyant growth, which again largely failed to materialise for much the same reasons that the original loans had failed --- necessitating a second round of forgiveness in 1999.

> This is [the] general pattern: the growth in programme countries fell short of the IMF's own targets. ​ On average for IMF programmes in the 1990s, the target GDP growth was 4 per cent, but actual growth was only 2 per cent. Since population growth was also about 2 per cent, this meant that the actual growth of income per person was close to zero. ---p204

> This is [the] general pattern: the growth in programme countries fell short of the IMF's own targets. ​ On average for IMF programmes in the 1990s, the target GDP growth was 4 per cent, but actual growth was only 2 per cent. Since population growth was also about 2 per cent, this meant that the actual growth of income per person was close to zero. ---p204

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The 1999 cancellation,​ in turn, proved itself to be insufficient and a further $40 billion of debt relief, representing 100 per cent of the debt of 18 countries, followed in 2005. By now, forgiveness has reached a point at which loans to low-income countries are no longer at all credible. ​ For this reason, it makes sense to provide finance only in the form of grants.

The 1999 cancellation,​ in turn, proved itself to be insufficient and a further $40 billion of debt relief, representing 100 per cent of the debt of 18 countries, followed in 2005. By now, forgiveness has reached a point at which loans to low-income countries are no longer at all credible. ​ For this reason, it makes sense to provide finance only in the form of grants.

-

The IMF's role as a provider of short-term finance to economies facing crises, particularly in emerging markets, is a valuable one, and the global economy needs an institution to fulfil this function. ​ However, the role it has invented for itself since 1980 of providing development loans, particularly to the poorest countries, is ill-conceived,​ has failed miserably, and should be abandoned. ​ This practice is becoming ever more farcical, with the IMF's new fascination with getting popular endorsement for its programmes from the populations of partner countries --- because this 'local design'​ of programmes has not changed its insistence its exhaustive list of conditionalities for a loan to be approved. ​ Where the outcomes of popular consultations suggest designs that don't incorporate traditional IMF conditionalities,​ loans are not approved.

+

The IMF's role as a provider of short-term finance to economies facing crises, particularly in emerging markets, is a valuable one, and the global economy needs an institution to fulfil this function. ​ However, the role it has invented for itself since 1980 of providing development loans, particularly to the poorest countries, is ill-conceived,​ has failed miserably, and should be abandoned. ​ This practice is becoming ever more absurd, with the IMF's new fascination with getting popular endorsement for its programmes from the populations of partner countries --- because this 'local design'​ of programmes has not changed its insistence ​on its own exhaustive list of conditionalities for a loan to be approved. ​ Where the outcomes of popular consultations suggest designs that don't incorporate traditional IMF conditionalities,​ loans are not approved.

> We will tell you what to do, as well as promise you that you are doing it of your own free will. ---p206

> We will tell you what to do, as well as promise you that you are doing it of your own free will. ---p206

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- simplify its dealings with poor countries so as to reduce its intrusion in matters of domestic politics;

- simplify its dealings with poor countries so as to reduce its intrusion in matters of domestic politics;

- withdraw from the poorest countries, where its role is simply inappropriate --- the IMF should leave these countries to the aid agencies and concentrate in developing markets;

- withdraw from the poorest countries, where its role is simply inappropriate --- the IMF should leave these countries to the aid agencies and concentrate in developing markets;

-

- get rid of conditionality:​ the only important criterion is whether a country repays the loan (and if it does not, the IMF can sanction it by withholding future loans --- since the IMF has an agreement with its creditors ​that it is always paid first, then the IMF has a lot of leverage in keeping other creditors out if it refuses to lend (compare with the multilateral punishment strategy discussed in Chapter 3)).

+

- get rid of conditionality:​ the only important criterion is whether a country repays the loan (and if it does not, the IMF can sanction it by withholding future loans --- since the IMF has an agreement with its debtors ​that it is always paid first, then the IMF has a lot of leverage in keeping other creditors out if it refuses to lend (compare with the multilateral punishment strategy discussed in Chapter 3)).

Ultimately, the IMF needs to return to its original mandate of financial stabilisation and abandon its failed attempts as a development partner.

Ultimately, the IMF needs to return to its original mandate of financial stabilisation and abandon its failed attempts as a development partner.

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These favourable conditions have translated into successes such as: the virtual eradication of measles in southern Africa between 1996 and 2000 through immunisation and vaccine; radical reduction in diarrhoea-related deaths in Egypt in the 1980s through oral rehydration therapy; the virtual elimination of polio from Latin America from 1985; drastic reduction in the leading cause of blindness, trachoma, in Morocco from 1997; drastic reductions in maternal death in Sri Lanka; reductions in TB in China during the 1990s; the elimination of river blindness in West Africa from 1974; etc, etc.

These favourable conditions have translated into successes such as: the virtual eradication of measles in southern Africa between 1996 and 2000 through immunisation and vaccine; radical reduction in diarrhoea-related deaths in Egypt in the 1980s through oral rehydration therapy; the virtual elimination of polio from Latin America from 1985; drastic reduction in the leading cause of blindness, trachoma, in Morocco from 1997; drastic reductions in maternal death in Sri Lanka; reductions in TB in China during the 1990s; the elimination of river blindness in West Africa from 1974; etc, etc.

-

It is because of these many successes that the catastrophic failures in aid agencies'​ attempts to tackle the HIV/AIDS pandemic, both historic and present, are particularly galling. ​ By 1983 many voices had already identified the African risks if serious action was not taken; by the late 1980s there was a strong consensus among all experts both that drastic action was urgently required, and in projecting the scale of the consequences if nothing was done. Nevertheless,​ the most minimal interventions were made by all aid donors until the issue became popular in the Western media in the late 1990s, with the number of infections reaching approximately 40 million by the turn of the century.

+

It is because of these many successes that the catastrophic failures in aid agencies'​ attempts to tackle the HIV/AIDS pandemic, both historic and present, are particularly galling. ​ By 1983 many voices had already identified the African risks if serious action was not taken; by the late 1980s there was a strong consensus among experts both that drastic action was urgently required, and in projecting the scale of the consequences if nothing was done. Nevertheless,​ the most minimal interventions were made by all aid donors until the issue became popular in the Western media in the late 1990s, with the number of infections reaching approximately 40 million by the turn of the century.

-

The first tragedy was the failure of aid agencies to take swift action. ​ The reason for inaction in the late 80s and early 90s had a few simple causes. ​ Firstly, no single agency took responsibility for the consequences of the pandemic. ​ Many aid agencies //could// have acted to avert the crisis, and a sincere campaign by any one of them would have been sufficient to seriously mitigate the consequences. ​ However, action on this scale would have been '​costly'​ for any single agency, because the threat, although well understood by all health experts, was not a popular cause in the Western media. ​ Easterly proposes a model: when one agency acts, or one department of an agency acts, then they alone bear the costs of action whereas all agencies or departments share the accolades, since it is difficult to observe who was most effective in achieving those results. ​ In this model, when only one agency is in a position to act it will, but as the number of agencies with responsibility for this field rises, the probability of action by any one agency decreases.((He terms this the 'Kitty Genovese Effect',​ by analogy to a murder case in which any one of dozens of witnesses could have prevented a crime, but because there were so many, each assumed another would do so.))

+

The first tragedy was the failure of aid agencies to take swift action. ​ The reason for inaction in the late 80s and early 90s had a few simple causes. ​ Firstly, no single agency took responsibility for the consequences of the pandemic. ​ Many aid agencies //could// have acted to avert the crisis, and a sincere campaign by any one of them would have been sufficient to seriously mitigate the consequences. ​ However, action on this scale would have been '​costly'​ for any single agency, because the threat, although well understood by all health experts, was not a popular cause in the Western media. ​ Easterly proposes a model: when one agency acts, or one department of an agency acts, then they alone bear the costs of action whereas all agencies or departments share the accolades, since it is difficult to observe who was most effective in achieving those results ​(and everybody was at least pretending to do something). In this model, when only one agency is in a position to act it will, but as the number of agencies with responsibility for this field rises, the probability of action by any one agency decreases.((He terms this the 'Kitty Genovese Effect',​ by analogy to a murder case in which any one of dozens of witnesses could have prevented a crime, but because there were so many, each assumed another would do so.))

The second tragedy is that aid agencies'​ current strategy towards fighting both the virus, as well as health threats more broadly, is grossly inefficient. ​ One of the basic principles of good health management is that limited resources --- and resources available to combat health problems are always limited, as much so in the West as in Africa --- should be spent on the cheapest available means of saving and extending life. This is categorically not the approach that is currently being taken.

The second tragedy is that aid agencies'​ current strategy towards fighting both the virus, as well as health threats more broadly, is grossly inefficient. ​ One of the basic principles of good health management is that limited resources --- and resources available to combat health problems are always limited, as much so in the West as in Africa --- should be spent on the cheapest available means of saving and extending life. This is categorically not the approach that is currently being taken.

-

In the context of fighting HIV/AIDS, there has a sustained lack of research into the relative cost-effectiveness of different approaches to prevention and cure. Nevertheless,​ it is now clear that preventative measures such as education, condom distribution,​ targeting of particularly high-risk groups such as prostitutes and simple drug interventions such as a one-off dose of nevirapine during labour to prevent transmission to newborns, are many (often hundreds) of times more cost-effective than adult treatment with antiretrovirals.

+

In the context of fighting HIV/AIDS, there has been a sustained lack of research into the relative cost-effectiveness of different approaches to prevention and cure. Nevertheless,​ it is now clear that preventative measures such as education, condom distribution,​ targeting of particularly high-risk groups such as prostitutes and simple drug interventions such as a one-off dose of nevirapine during labour to prevent transmission to newborns, are many (often hundreds) of times more cost-effective than adult treatment with antiretrovirals.

> The...WHO report...states that money spent on educating prostitutes saves between one thousand and one hundred times more lives than the same amount of money spent on antiretroviral treatment. ---p227

> The...WHO report...states that money spent on educating prostitutes saves between one thousand and one hundred times more lives than the same amount of money spent on antiretroviral treatment. ---p227

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Looking at the context more broadly, there are a large variety of health interventions in other diseases that are just as fatal as HIV/AIDS that also cost far less than antiretroviral treatment, that are currently being neglected in favour of antiretrovirals.

Looking at the context more broadly, there are a large variety of health interventions in other diseases that are just as fatal as HIV/AIDS that also cost far less than antiretroviral treatment, that are currently being neglected in favour of antiretrovirals.

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> Bush's cut in other health spending [of $100 million when announcing a $15 billion intervention against AIDS] was particularly unfortunate when two and a half times as many African side from other preventable diseases than die from AIDS...include[ing] malaria, [TB], diarrhoea and others. ​ Worldwide, in 2002 there were 15.6 million deaths from these causes, as opposed to 2.8 million deaths from AIDS. ---p222

+

> Bush's cut in other health spending [of $100 million when announcing a $15 billion intervention against AIDS] was particularly unfortunate when two and a half times as many Africans die from other preventable diseases than die from AIDS...include[ing] malaria, [TB], diarrhoea and others. ​ Worldwide, in 2002 there were 15.6 million deaths from these causes, as opposed to 2.8 million deaths from AIDS. ---p222

At the time of writing, first-line antiretrovirals cost approximately US$304 per year, having rapidly reduced in price from 30 times that due to competition from generics pharmaceutical firms (under exemptions from TRIPS that have now expired). ​ However, treatment is notoriously complex and difficult to administer, even in the West. Drug administration needs close observation by well-trained medical staff to ensure that the patient conforms to the regimen (otherwise the virus will generate tolerance to the drugs and resistant strains will quickly develop --- even in the West often 20-40 per cent of patients fail to conform to their regimen) and also to make subtle changes to the cocktail of drugs to combat any extreme side-effects. ​ This medical support costs in the region of US$1200 per patient per year and unlike the cost of drugs there is little scope for this to ever be reduced. ​ Moreover, first-line antiretrovirals are typically effective for only 3-5 years before the patient develops full-blown AIDS and requires drugs that are too expensive to be considered in the African context (and will not be subject to the same competition from generics manufacturers due to the expiry of the TRIPS waiver). ​ In Brazil, this average period is as low as 14 months. ​ In comparison, many interventions against threats such as measles and malaria require drugs that cost only a few dollars administered once or infrequently that can be managed by low-skilled programme officers with minimal health training. ​ Current health aid is insufficient to cover all of these costs, despite recent increases associated with the AIDS pandemic.

At the time of writing, first-line antiretrovirals cost approximately US$304 per year, having rapidly reduced in price from 30 times that due to competition from generics pharmaceutical firms (under exemptions from TRIPS that have now expired). ​ However, treatment is notoriously complex and difficult to administer, even in the West. Drug administration needs close observation by well-trained medical staff to ensure that the patient conforms to the regimen (otherwise the virus will generate tolerance to the drugs and resistant strains will quickly develop --- even in the West often 20-40 per cent of patients fail to conform to their regimen) and also to make subtle changes to the cocktail of drugs to combat any extreme side-effects. ​ This medical support costs in the region of US$1200 per patient per year and unlike the cost of drugs there is little scope for this to ever be reduced. ​ Moreover, first-line antiretrovirals are typically effective for only 3-5 years before the patient develops full-blown AIDS and requires drugs that are too expensive to be considered in the African context (and will not be subject to the same competition from generics manufacturers due to the expiry of the TRIPS waiver). ​ In Brazil, this average period is as low as 14 months. ​ In comparison, many interventions against threats such as measles and malaria require drugs that cost only a few dollars administered once or infrequently that can be managed by low-skilled programme officers with minimal health training. ​ Current health aid is insufficient to cover all of these costs, despite recent increases associated with the AIDS pandemic.

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It is the job of health economists to research the cost of intervening against different health threats and calculate the most cost-effective use of available funds, and in the context of the AIDS crisis they have entirely failed in this duty.

It is the job of health economists to research the cost of intervening against different health threats and calculate the most cost-effective use of available funds, and in the context of the AIDS crisis they have entirely failed in this duty.

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====== Part III --- The White Man's Army ======

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====== Part III: The White Man's Army ======

===== From Colonialism to Postmodern Imperialism =====

===== From Colonialism to Postmodern Imperialism =====

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> Western intervention in the government of the Rest, whether during colonisation or decolonisation,​ has been on the far side of unhelpful. ​ The West should learn from its colonial history when it indulges neo-imperialist fantasies. ​ They didn't work before and they won't work now. ---p268

> Western intervention in the government of the Rest, whether during colonisation or decolonisation,​ has been on the far side of unhelpful. ​ The West should learn from its colonial history when it indulges neo-imperialist fantasies. ​ They didn't work before and they won't work now. ---p268

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===== Invading the Poor (US military interventions) =====

===== Invading the Poor (US military interventions) =====

-

This chapter stands out from the general tone of the book in several ways. The arguments are almost entirely political rather than economic.((Easterly admits that this chapter extends beyond his expertise early on: "If it were not for the US Army trying to promote economic development,​ it would seem presumptuous for me as an economist to comment on military interventions."​ (p274.) )) ((Easterly also admits that the one attempt to apply economic analysis is deeply flawed: "There is a selection problem with Cold War interventions,"​ which he makes no attempt to address. (p277.) )) The assumed audience appears to be the centre or centre-right of the American media; consequently assertions unusual in that context are argued with care and at length whereas other quite remarkable and unfounded statements are made without any attempt at justification. ​ Often these would strike a British or European audience as lazy or absurd.((Examples:​ "The advocates of American military intervention during the Cold War had good intentions. ​ Communism was an evil economic and political system. ​ The Soviets did their own meddling in poor countries, which could have required meddling by the Americans in response. ​ Perhaps military action may have been necessary to get rid of some evil governments imposed by the Soviets."​ (p275, emphasis original.) ​ Elsewhere, there is an unsupported assertion that the "​American Left" sought to impose the Sandinistas on Nicaragua, as opposed to supporting the right of Nicaragua to select its own government ​independent of what the International Court of Justice ​determined to be state terrorism by the US, and may have constituted aggression.)) ​ Quite generally, evidence and argument is patchier and open to alternative explanations than elsewhere in the book.((Examples:​ the recent history of Haiti omits detail of US involvement in the removal of Aristide and the circumstances under which he was reinstated, casting recent US intervention in a rather more positive light. ​ Elsewhere Easterly notes that "the Nicaraguan people...were not fans of...never-ending war" --- and so voted against the Sandinistas --- whilst entirely missing the seemingly obvious inference (or at least interpretation) that a population can be coerced into selecting the favourite of a foreign government by a sustained campaign of terror alongside a credible threat that it will continue should the wrong government remain in power. (p281.) )) These factors make it more difficult to strike an appropriate balance between recounting Easterly'​s arguments and drawing attention to their flaws or providing counterarguments. ​ As the most politically tenuous area of the book, it would be one of the best to read in its original form and analyse for oneself, as one of the hardest to fairly summarise and critique ​in an abridgement.

+

This chapter stands out from the general tone of the book in several ways. The arguments are almost entirely political rather than economic.((Easterly admits that this chapter extends beyond his expertise early on: "If it were not for the US Army trying to promote economic development,​ it would seem presumptuous for me as an economist to comment on military interventions."​ (p274.) )) ((Easterly also admits that the one attempt to apply economic analysis is deeply flawed: "There is a selection problem with Cold War interventions,"​ which he makes no attempt to address. (p277.) )) The assumed audience appears to be the centre or centre-right of the American media; consequently assertions unusual in that context are argued with care and at length whereas other quite remarkable and unfounded statements are made without any attempt at justification. ​ Often these would strike a British or European audience as lazy or absurd.((Examples:​ "The advocates of American military intervention during the Cold War had good intentions. ​ Communism was an evil economic and political system. ​ The Soviets did their own meddling in poor countries, which could have required meddling by the Americans in response. ​ Perhaps military action ​//may// have been necessary to get rid of some evil governments imposed by the Soviets."​ (p275, emphasis original.) ​ Elsewhere, there is an unsupported assertion that the "​American Left" sought to impose the Sandinistas on Nicaragua, as opposed to supporting the right of Nicaragua to select its own government ​without interference described by the International Court of Justice ​as state terrorism by the US, which may actually ​have constituted aggression.)) ​ Quite generally, evidence and argument is patchier and open to alternative explanations than elsewhere in the book.((Examples:​ the recent history of Haiti omits detail of US involvement in the removal of Aristide and the circumstances under which he was reinstated, casting recent US intervention in a rather more positive light. ​ Elsewhere Easterly notes that "the Nicaraguan people...were not fans of...never-ending war" --- and so voted against the Sandinistas --- whilst entirely missing the seemingly obvious inference (or at least interpretation) that a population can be coerced into selecting the favourite of a foreign government by a sustained campaign of terror alongside a credible threat that it will continue should the wrong government remain in power. (p281.) )) These factors make it more difficult to strike an appropriate balance between recounting Easterly'​s arguments and drawing attention to their flaws or providing counterarguments. ​ As the most politically tenuous area of the book, it would be one of the best to read in its original form and analyse for oneself, as one of the hardest to fairly summarise and critique ​here.

-

Easterly sees military interventions of the type carried out by the US, particularly since World War II (but also prior) as similar in nature, but even more extreme, than failed interventions by aid agencies:

+

Easterly sees military interventions of the type carried out by the US, particularly since World War II (but also prior) as similar in nature ​(but even more extreme) to failed interventions by aid agencies:

-

> [M]ilitary intervention is too perfect an example of what this book argues you should not do --- have the West operate on other societies with virtually no feedback or accountability. ​ The military is even more insulated from the interests of the poor than aid agencies are. ---p274 (emphasis original)

+

> [M]ilitary intervention is too perfect an example of what this book argues you should ​//not// do --- have the West operate on other societies with virtually ​//no// feedback or accountability. ​ The military is even more insulated from the interests of the poor than aid agencies are. ---p274 (emphasis original)

Further, interventionists ignore local conditions and apply the same confused approach as aid agencies to "​dealing with gangsters"​. ​ The same collective responsibility problems apply, since Western countries can blame one another and the UN for failures, whilst the UN blames member countries on the few occasions that it is diplomatically possible to do so --- and none of these actors bear any cost for mistakes.

Further, interventionists ignore local conditions and apply the same confused approach as aid agencies to "​dealing with gangsters"​. ​ The same collective responsibility problems apply, since Western countries can blame one another and the UN for failures, whilst the UN blames member countries on the few occasions that it is diplomatically possible to do so --- and none of these actors bear any cost for mistakes.

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> [R]emember, Americans say we won the Cold War. Whose victory is it when most of the poor countries where (and allegedly, on whose behalf) the Americans fought the Cold War are still in such bad shape? ---p276

> [R]emember, Americans say we won the Cold War. Whose victory is it when most of the poor countries where (and allegedly, on whose behalf) the Americans fought the Cold War are still in such bad shape? ---p276

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He then turns to more detailed histories of Nicaragua and Angola, highlighting in detail the reasons he believes that American intervention hampered good governance and economic stability, then blithely ​asserting ​that "the other side" were, of course, just as bad --- but we can't really do anything about that and shouldn'​t try.

+

He then turns to more detailed histories of Nicaragua and Angola, highlighting in detail the reasons he believes that American intervention hampered good governance and economic stability, then blithely ​asserts ​that "the other side" were, of course, just as bad --- but we can't really do anything about that and shouldn'​t try.

The continuity of this policy --- and its harmful results --- is illustrated with reference to:

The continuity of this policy --- and its harmful results --- is illustrated with reference to:

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Finally, Easterly may be trying to back down from this position partially, suggesting that "​rescuing innocent civilians from murderous attacks"​ is in some way an entirely different proposition to humanitarian intervention,​ implying that it may be both viable and beneficial. ​ He offers no clue how to distinguish the two different cases --- recall that he classes the Rwandan genocide as a situation in which intervention was inevitably doomed to failure and should not have been attempted.

Finally, Easterly may be trying to back down from this position partially, suggesting that "​rescuing innocent civilians from murderous attacks"​ is in some way an entirely different proposition to humanitarian intervention,​ implying that it may be both viable and beneficial. ​ He offers no clue how to distinguish the two different cases --- recall that he classes the Rwandan genocide as a situation in which intervention was inevitably doomed to failure and should not have been attempted.

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====== Part IV --- The Future ======

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====== Part IV: The Future ======

===== Home-grown Development =====

===== Home-grown Development =====

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> The great bulk of development success in the Rest comes from self-reliant,​ exploratory efforts, and the borrowing of ideas, institutions,​ and technology from the West when it suits the Rest to do so. ---p318

> The great bulk of development success in the Rest comes from self-reliant,​ exploratory efforts, and the borrowing of ideas, institutions,​ and technology from the West when it suits the Rest to do so. ---p318

-

The strategies employed by these success stories are markedly varied. ​ We should take from this that the adaptation of policies and institutions to local conditions would seem to be much more important than deploying the '​perfect strategy'​ in some abstract, generalised sense. ​ The "​market for feedback and accountability" ​seem to be involved in all of these stories, but they do not follow anything close to an idealised free-market model.

+

The strategies employed by these success stories are markedly varied. ​ We should take from this that the adaptation of policies and institutions to local conditions would seem to be much more important than deploying the '​perfect strategy'​ in some abstract, generalised sense. ​ The "​market for feedback and accountability" ​seems to be involved in all of these stories, but they do not follow anything close to an idealised free-market model.

Independence from Western interference clearly isn't a panacea in itself; development can easily be hampered by autocratic institutions and corruption, and many economies have not yet found their own particular path to development success. ​ And Western assistance can play a part in helping these countries to find that path, provided that it is "​suitably humbled and chastened by the experience of the past"​.((p318.))

Independence from Western interference clearly isn't a panacea in itself; development can easily be hampered by autocratic institutions and corruption, and many economies have not yet found their own particular path to development success. ​ And Western assistance can play a part in helping these countries to find that path, provided that it is "​suitably humbled and chastened by the experience of the past"​.((p318.))

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> It's so obvious, I'm embarrassed even to lay it out. But it's worth laying out only because it is the opposite of the present Western effort to transform the rest. ---p333-4

> It's so obvious, I'm embarrassed even to lay it out. But it's worth laying out only because it is the opposite of the present Western effort to transform the rest. ---p333-4

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A number of examples of interventions that have been subjected to systematic evaluation against control conditions, in an attempt to illustrate that it is nontrivial to predict which //a priori// 'good ideas' produce results and which fail for reasons that may or may not be easy to discover, justifying ​the need for robust independent evaluation mechanisms.

+

A number of examples of interventions that have been subjected to systematic evaluation against control conditions ​are described, in an attempt to illustrate that it is nontrivial to predict which //a priori// 'good ideas' produce results and which fail for reasons that may or may not be easy to discover. This illustrates ​the need for robust independent evaluation mechanisms.

Potential pitfalls are flagged. ​ The first is that a redoubled focus on observable outcomes is likely to increase the current bias towards projects with the most observable outcomes.

Potential pitfalls are flagged. ​ The first is that a redoubled focus on observable outcomes is likely to increase the current bias towards projects with the most observable outcomes.

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> It is hard to think of any incentive system that is going to successfully reward invisible effort toward producing invisible outcomes. ​ Give it up. ---p324

> It is hard to think of any incentive system that is going to successfully reward invisible effort toward producing invisible outcomes. ​ Give it up. ---p324

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Another is that making aid agencies more accountable for results might push them towards tackling '​easier'​ problems, which they can be confident that they will achieve ​intended results. These may well be the sort of tasks that national governments would have addressed themselves in the absence of the agencies, perhaps encouraging the worst kind of fungibility.

+

Another is that making aid agencies more accountable for results might push them towards tackling '​easier'​ problems, ​ini which they can be confident that they will achieve ​their goals. These may well be the sort of tasks that national governments would have addressed themselves in the absence of the agencies, perhaps encouraging the worst kind of fungibility.

> This "​fungibility"​ of aid money is something that aid analysts worry about, but perhaps is less of a worry when there are so many things failing. ---p325

> This "​fungibility"​ of aid money is something that aid analysts worry about, but perhaps is less of a worry when there are so many things failing. ---p325

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Two examples of possible mechanisms to improve accountability and feedback are detailed, one existing and one not. The first is the established website globalgiving.com,​ a clearing house for aid projects in which agencies, individuals or firms post project proposals and donors of all kinds select those they wish to support. ​ The second is a voucher scheme in which individuals and/or communities are given vouchers that they can spend with aid agencies operating in their area: people on individual interventions such as vaccinations or food supplements and communities on larger projects such as roads and wells. ​ Such a scheme would give a voice to the recipients of aid, enabling ​to choose ​to '​vote'​ for the interventions that they most want or need. Agencies receiving vouchers could then exchange them for cash from donors, giving arms-length donors better information about which interventions the poor were really demanding. ​ This process also favours agencies that achieve the same outcomes as others but at lower unit cost. Again, it's emphasised that possibilities such as these, no matter how good they sound, should be tested on a small scale and independently evaluated before being considered useful in any particular context. ​ Incremental improvement requires not only new ideas but proper evaluation of those ideas to determine if, when and where they work.

+

Two examples of possible mechanisms to improve accountability and feedback are detailed, one existing and one postulated. The first is the established website ​[[http://​www.globalgiving.com|GlobalGiving]], a bulletin board for aid projects in which agencies, individuals or firms post project proposals and donors of all kinds select those they wish to support. ​ The second is a voucher scheme in which individuals and/or communities are given vouchers that they can spend with aid agencies operating in their area: people on individual interventions such as vaccinations or food supplements and communities on larger projects such as roads and wells. ​ Such a scheme would give a voice to the recipients of aid, enabling ​them to '​vote'​ for the interventions that they most want or need. Agencies receiving vouchers could then exchange them for cash from donors, giving arms-length donors better information about which interventions the poor were really demanding. ​ This process also favours agencies that achieve the same outcomes as others but at lower unit cost. Again, it's emphasised that possibilities such as these, no matter how good they sound, should be tested on a small scale and independently evaluated before being considered useful in any particular context. ​ Incremental improvement requires not only new ideas but proper evaluation of those ideas to determine if, when and where they work.

> Discard your patronising confidence that you know how to solve other people'​s problems better than they do. Don't try to fix governments or societies. ​ Don't invade other countries, or send arms to one of the brutal armies in a civil war. End conditionality. ​ Stop wasting our time with summits and frameworks. ​ Give up on sweeping and naïve institutional reform schemes. ​ The aim should be to make individuals better off, not to transform governments or societies...

> Discard your patronising confidence that you know how to solve other people'​s problems better than they do. Don't try to fix governments or societies. ​ Don't invade other countries, or send arms to one of the brutal armies in a civil war. End conditionality. ​ Stop wasting our time with summits and frameworks. ​ Give up on sweeping and naïve institutional reform schemes. ​ The aim should be to make individuals better off, not to transform governments or societies...

>

>

> Remember, aid cannot achieve the end of poverty. ​ Only home-grown development based on the dynamism of individuals and firms in free markets can do that. ---p322

> Remember, aid cannot achieve the end of poverty. ​ Only home-grown development based on the dynamism of individuals and firms in free markets can do that. ---p322